State cannot cancel industrial allotments for non-operation caused by forced mass migration and displacement.

The petitioner, a registered small-scale industrial unit owned by a Kashmiri Pandit, was originally allotted Shed No. 5 at Bagh-i-Ali Mardan Khan Industrial Area, Srinagar, in 1978

Following the mass migration of Kashmiri Pandits in 1989 due to security concerns, the petitioner abandoned the unit

In 1991, the shed was damaged by fire

While the petitioner was in migration, the authorities re-allotted Shed No. 5 to Respondent No. 6

In a previous round of litigation (OWP No. 488/1996), the High Court directed the State to either provide a similar shed to the petitioner or cancel Respondent No. 6’s allotment

The respondents subsequently offered two sheds at Industrial Estate, Rangret, but imposed high premiums and significantly higher rent (Rs. 5,250/- compared to the original Rs. 150/-)

When the petitioner challenged these terms through contempt petitions, the respondents issued Order No. IDC/B/2004/73 on 06.04.2004, cancelling the alternate allotment for alleged non-compliance

The petitioner then filed the present writ seeking to quash the cancellation and regain possession of Shed No. 5

1. Whether the State's action in cancelling the petitioner's original allotment and imposing onerous conditions for alternate allotment was legally and equitably sustainable given the petitioner’s status as a Kashmiri migrant

2. Whether the official respondents violated the principles of natural justice by treating the petitioner as a new allottee rather than a displaced original allottee

The court relied on the constitutional and equitable principle that the State and its instrumentalities bear a solemn obligation to protect and preserve the property (freehold or leasehold) of citizens displaced by turmoil

Principles of Natural Justice, holding that administrative actions must account for the "force of circumstances" (such as mass migration for safety) which prevent the performance of standard contractual or industrial obligations

The court observed that the official respondents "played upon the misery" of the petitioner

It held that the absence of the proprietor due to migration should not have been exploited to cancel the original allotment, as the State’s duty was to act as a "protector" rather than a "predator" of a migrant’s property

The court criticized the respondents for treating the alternate allotment at Rangret as a fresh commercial transaction by demanding premiums and higher rent, rather than recognizing it as a restoration of the petitioner's original rights

Furthermore, the court found the respondents' expectation that the petitioner should have restored industrial activity during a period of peak regional turmoil to be unreasonable and a violation of natural justice

The court determined that justice required a restoration of the petitioner's industrial capacity, adjusted for the passage of time and current equities

The court directed the official respondents to allot two sheds at Industrial Estate, Rangret, to the petitioner. If the previously identified sheds were unavailable, new ones must be provided.

The holding specifically mandated that: (i) no premium shall be charged for the allotment; (ii) rent shall be charged at the prevalent rate; and (iii) no arrears of rent shall be demanded, with rent liability commencing only prospectively from the date the petitioner takes physical possession